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A combination of escalating costs of ASIC’s industry funding model and new education standards will force accountants to pass on costs or leave the financial advice space, argues CA ANZ.
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CA ANZ slams ASIC’s industry funding model
02 May 2019
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In response to ASIC’s latest indicative levies for the 2018–19 year, CA ANZ has written to the corporate regulator to call for a more “reasonable mechanism” to cover its enforcement costs.
CA ANZ noted that enforcement actions account for the majority of ASIC’s costs, making it unfair for the entire sector to bear the costs of those who are the subject of the actions.
“We don’t consider it appropriate for all entities, including those doing the ‘right thing’ to pay as ‘users’ of enforcement actions against a few companies who do the ‘wrong thing’,” CA ANZ said.
In particular, CA ANZ noted that accountants have been struggling with costs ever since the accountants’ exemption was scrapped in 2016, and that the compliance costs have now significantly increased with the need to comply with the Financial Adviser Standards & Ethics Authority’s education reforms.
“Many of our members have told us that they have serious concerns about the new standards, and will likely leave the financial advice industry if they are required to do further study,” CA ANZ said.
“They are further disincentivised to remain in the financial advice space by the industry funding levies.
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“Furthermore, chartered accountants who elect to remain will have little choice but to pass on their increased costs to their clients, which is again at odds with the government’s objective of making quality financial advice accessible for all Australians.”
The professional body has called for ASIC to take into consideration how the levies affect the business model of limited licensees and has recommended a reduction in fees by reducing the per-adviser levy or charging a fee aligned with revenue.
CPA Australia has also been actively lobbying against ASIC’s industry funding model, with head of external policy Paul Drum vocal on the quantum of fees imposed on the industry, especially those seeking to register or deregister as an SMSF auditor, who face a fee of $1,927 and $899, respectively.
“If [the government is] aware of all the facts about ASIC’s self-funding model, it might be time for them to actually revisit it and say perhaps they were a bit hasty going down that path,” Mr Drum said.
“We’ll be disappointed if they haven’t actually gone back and reviewed that with a view to ameliorating those costs on those in public practice, because the long-term implications of the current model are less competition, market concentration and less availability of services to consumers or service requirers, and that’s not a good thing.”
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